Who is the creditor? Head office?
Accounting Entries in the books of Head Office (H.O.):
1.
For Cost Price of Goods sent to Branch:
Branch Stock A/c Dr
To Goods Sent to Branch A/c
2.
For Cost Price of Goods returned by Branch:
Goods Sent to Branch A/c Dr
To Branch Stock A/c
3.
For remittance to Branch for expenses:
Branch Cash A/c Dr To Bank A/c
XXX
XXX
4.
For cash sales at Branch:
Bank A/c [(or) branch cash, if money is not immediately remitted] Dr
To Branch Stock A/c
XXX
XXX
5.
For credit sales at Branch:
Branch Debtors A/c Dr
To Branch Stock A/c
6.
For Goods returned to Branch by customers:
Branch Stock A/c Dr
To Branch Debtors A/c
7.
For Cash collected from Branch Debtors:
Bank A/c [(or) branch cash, if money is not immediately remitted] Dr
To Branch Debtors A/c
https://castudyweb.com/wp-content/uploads/2019/05/Branch_Accounts_Theory_and_Problems.pdf
If the HO had recognised sales in HO and wanted branch to deal with debit note to save taxes, I think the law will prohibit such transactions.
CAclubindia
